Apple Spreads iPhone Love In China, Stock Juiced For Run To $500

Apple will finally be able to sell the long-awaited iPhone 4S in mainland China, according to reports in the Beijing Morning Post. [1]

China’s Ministry of Industry and Information Technology has issued the network permit to China Unicom, the country’s second largest carrier, to sell the phone from this month onwards, making it likely that the phone will be available for Christmas.

Since its debut in October, the iPhone 4S has ruled smartphone sales for two consecutive months at all the three major carriers in the U.S., Verizon, AT&T and Sprint.

According to latest Q3 figures released by Strategy Analytics, China has leapfrogged U.S. to be the world’s largest smartphone market by volume. [2] This is due to the sheer weight of the country’s population.

Smartphone penetration was only around 15% in China in 2010; however, as the country grows and the average Chinese sees an increase in buying power, the demand for smartphones will increase exponentially. Even Apple’s CEO Tim Cook acknowledged the immense potential that China presents when he said during the recent earnings call that the country was Apple’s fastest growing region by far and that the company was doing everything it could to market its brand in China. Access to the world’s most populous country through its second largest carrier for the company’s best selling smartphone will surely go a long way in adding to Apple’s market share.

The iPhone has been available in China since 2009 through China Unicom and it is likely that China Telecom launches the iPhone 4S on its CDMA network early next year. China Mobile has also been in talks to launch the iPhone in China. [2]

If these talks materialize, Apple could be looking at a huge market share gain next year.

Pricing declines in the long run

However, U.S. continues to be the largest smartphone market by revenue. This means that on an average, the average pricing for smartphones in more in the U.S. than China. This is understandable considering that being an emerging economy, an average Chinese smartphone buyer cannot afford to spend as much on a smartphone as an average U.S. consumer can.